Senate Bill 355 would divert patient savings to for-profit businesses
For the editor:
Our state legislature has passed reforms to ensure safe school environments for immunocompromised individuals through good immunization policies.
Recently, Connecticut passed a law allowing patients to use assistance programs to reduce out-of-pocket expenses.
That’s why it’s alarming to see these same lawmakers considering legislation that would divert patient savings into the pockets of for-profit corporations.
In 1992, Congress created the 340B Drug Discount program to stretch limited resources and help patients access lifesaving health care. The program requires pharmaceutical manufacturers to supply drugs to eligible 340B hospitals at significantly reduced prices. Hospitals are eligible for $340 billion in rebates by serving a percentage of low-income or uninsured patients.
And while this program has good intentions, unfortunately hospitals have seen it as a piggy bank over the past thirty years, abusing and expanding the program to where it is currently unrecognizable. And some states are trying to exacerbate the program.
Connecticut’s SB 355 would make the situation even worse.
If passed, the bill would require manufacturers to send discounted 340B drugs to “contract pharmacies,” which are closely tied to abuses of the 340B program and have no obligation to pass the savings on to patients. . Shouldn’t that be our goal when enacting health savings legislation, that patients save money? Not in this case.
340B is now the second largest federal drug program behind Medicare Part D at the level of $38 million in 2020. In 2010, the program was expanded to allow hospitals to contract with an unlimited number of pharmacies to dispense 340 billion purchased drugs to patients. Since then, the number of contract pharmacies has increased by 4,000%. Some Connecticut hospitals do business through pharmacies in Texas and California. How does this benefit Connecticut patients?
Even contracts at Hartford Healthcare and Yale New Haven Health in Connecticut have skyrocketed according to data from HRSA (Health Resources and Services Administration). In 2011, Yale had one pharmacy under contract and in 2022 has 266. In 2016, Hartford Health Care had 7 contracts and today has 148.
These are profitable relationships. A report of Berkley Research Group showed that the average profit margin on 340B drugs commonly distributed by contract pharmacies is estimated at 72%, compared to only 22% for non-340B drugs distributed by independent pharmacies.
According to arReport from the Community Oncologist Alliance (COA)some 340B hospitals charge patients, including the uninsured, up to 3.8 times the cost they pay to acquire the drug.
These “non-profit” 340B hospitals line their pockets at the expense of patients in need of charitable care; something they provide less than the average hospital.
Legislation like SB 355 was defeated in Vermont and Maine and is still under consideration in California. Arkansas passed a variant of the bill, and it is now tied to litigation.
While well-intentioned to help better serve populations who needed greater access to potentially life-saving drugs, not only does 340B need to be reformed, but states like Connecticut need to stay away from potential legislative pitfalls that could make an already corrupted program worse.
John La Mattina
LaMattina is the former president of Pfizer Global Research and Development. He is the author of the forthcoming book, “Profits and Pharma: Balancing Innovation, Medicine and Drug Prices.”